His desgination as a wilful defaulter comes over dues of Rs 67.65 crore.
Industrialist Yash Birla has been declared a wilful defaulter by UCO Bank. The action came over the failure of a Yash Birla Group to repay Rs 67.65 crore it owed to the state-owned bank. The debt was owed to the bank by Birla Surya, an arm of the group involved in the manufacture of solar power equipment.
It is perhaps ironic that the action against Yash Birla has been taken by a bank that was founded by his great-grand uncle and a former industrialist, Ghanshyam Das Birla.
Birla Surya had borrowed the money for the manufacture of multi-crystalline solar photovoltaic cells. The bank said that the company had a credit of Rs 100 crore, of which Rs 67 crore plus interest rate was due. The bank had termed the loan a non-performing asset (NPA) on June 3, 2013.
As per RBI's guidelines, wilful defaulters cannot avail any other facilities and their unit is excluded from floating new ventures or business for five years. The lenders may also initiate criminal proceedings against the defaulter.
According to the guidelines, a borrower can be declared a 'wilful defaulter' when s/he fails to pay his debts due to his own actions. This could include not paying despite having resources, diverting funds to other activities, or selling assets without informing lenders.
Yash Birla Group has more than a dozen companies, including Zenith Steel, Birla Lifestyle, Shola Infotech, Melstar Information Technologies. Most of these companies are stressed and have claimed to not be in a position to repay creditors. Last year, as many as three companies of the group - Birla Cotsyn, Birla Shloka Edutech and Zenith Birla - came under investigation for diversion of funds.
UCO Bank has been reporting losses for 14 quarters and its gross NPA is at Rs 29,888 crore.
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